Pound slumps to new two-year low as no-deal Brexit fears intensify

Sterling falls 1 per cent against US currency as Boris Johnson ‘turbo-charges’ no-deal preparations

The pound slumped to a new two-year low against the dollar after Boris Johnson announced the government was “turbo-charging” preparations for a no-deal Brexit on 31 October.

Sterling dropped to as low as $1.2243 on Monday after falling 1 per cent against the US currency. The pound was also down 1 per cent against the euro at €1.102.

The fall extended a slide that has seen the pound drop from as high as $1.33 in March, hitting British holidaymakers’ spending power as they jet off for summer breaks.

Against the euro, the pound has fallen by more than 7 cents than it did in May.

Connor Campbell, a financial analyst at SpreadEx, said sterling was going through a “worst-case-scenario end to July” which had set up three months of intense Brexit anxiety.

On Monday, Mr Johnson unveiled a special Brexit cabinet committee tasked with handling the UK’s preparations for a no-deal exit from the EU, which is described as being the government’s “number one priority”.

A disorderly exit from the trading bloc is widely expected to cause severe upheavals for businesses and consumers resulting in damage to the UK economy.

Michael Gove, the minister in charge of preparing for a no-deal exit, said on Sunday that the government is now “working on the assumption” that Britain will leave without a deal.

Mr Gove added in an article for The Sunday Times that the “entire machinery of government will work flat-out” to prepare for the scenario, as he claimed “planning for a no deal is now this government’s No 1 priority”.

He said Mr Johnson’s administration will also launch one of the biggest peacetime public information campaigns to inform the public about a no-deal scenario.

In contrast to the pound the FTSE 100 rose sharply on Monday, buoyed by multinational companies that earn much of their profits in overseas currencies.

The UK’s blue-chip index was up 2 per cent to 7,699.78 by 2.55pm.